Transportation Predictions That Will Shake-Up the Supply Chain Industry In 2018

In the book, The Living Supply Chain, the authors argue that “Speeding up the supply chain is at the root of everything that is good: improved revenue, reduced working capital, higher profitability, and less obsolete inventory.

Conversely, slowing down the supply chain is at the root of everything that is bad: working capital write-offs, reduced profitability, and slowing revenues.”

To “speed” up the supply chain is to invest in change and change will come with the digital transformation of the supply chain, which is the major focus for executives in 2018.

Much change in the supply chain industry will be due to innovative technologies for digital transformations, along with the recent tax reforms (see below), and the still-current driver shortage/capacity crunch.

The digital transformation of the supply chain will change everything – for the better.

These are the innovative technologies that I predict companies must use to undergo this transformation within their supply chains:

  1. Cloud-based technology
  2. Advanced Analytics
  3. Tracking and Tracing
  4. Supply Chain Visibility
  5. Blockchain
  6. Artificial Intelligence
  7. Predictive Analytics
  8. The Internet of Things

“In 2018, shippers must embrace change in order to succeed. Waiting and seeing what will happen is no longer an option,” adds Clark.

“Transportation management systems are poised as the fundamental tool for supply chain transformation, helping businesses to position themselves above the competition with sustainable profits and better service levels.”

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Supply chain – predictions for 2018 trends

When Elon Musk recently announced that Tesla would start building electric semi-trucks that would have 500-mile range and come with a version of Tesla’s Autopilot driving aid, the world realized it wasn’t a matter of if, but when these new trucks would be hitting the highways. After all, this is the same guy who said he was sick of sitting in traffic and launched the Boring Company, which is now tunneling beneath the gridlocked freeways of Los Angeles. And let’s not forget Musk’s SpaceX, the Hyperloop and Tesla – all radically different companies predicated on technology innovation, creativity, disruption and long term commercial viability.

The pace of innovation is picking up steam at an exponential rate. With advanced hardware, software and connectivity becoming accessible and cost effective on a global scale, we’re experiencing an innovation shift from desiring “better gadgets” to discovering entire new business categories built around technology. The implications for consumers is exhilarating and at times terrifying. The implications for businesses is terrifying and at times exhilarating.

Technology has become fully embedded in supply chain management – just go to any supply chain conference and you will find agendas dominated by tech talk. Robots, self-driving vehicles, electric trucks, blockchain, the Internet of Things (IoT), and new mobile-enabled categories are all poised to explode onto the scene in one form or another. It’s hard to predict what’s real and what will fade away, but expect 2018 to become a year of heavy innovation for supply chain leaders, even if it’s experimental. But…

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Making sure it’s business as usual, whatever the weather

The UK was recently subjected to an extreme cold spell that saw widespread disruption across the UK. Dozens of rail services and flights were delayed or cancelled, thousands of schools were closed, a raft of homes were left without power in certain parts of the country and many people struggled to get to work in the snowy and icy conditions.

This short spell of disruption would have come at a cost to the UK economy, but in reality we should be thankful we’re not subjected to the extremes of weather that can impact other parts of the world. Anyone remember the scenes we saw on our TVs in the wake of Hurricane Irma in the Caribbean and Florida? In addition to the devastation caused to thousands of families’ homes, businesses were left in turmoil too. Florida, for example saw the price of its diesel soar and shipping and trucking capacity was severely limited in the region. It is estimated that the economic cost of the storm which has caused significant damage to homes, businesses and crops could be as much as £227bn.

The knock on effect of the storm’s impact is still being felt, especially for any businesses with suppliers based in the storm-damaged regions. This event highlights the increasing risks businesses face when they have a supply base in a region that could be affected by adverse weather or other environmental factors such as earthquakes, or volcanic eruptions.

No matter where in the world your critical supply base is located it is essential that businesses ask their suppliers the right questions from the start of their relationship. Even with non-business critical purchasing activity, adopting a proactive approach to on-boarding/supplier evaluation and supplier contracting means that you can assess your suppliers and ask questions about disaster recovery, insurances, and best practice around handling large scale environmental events from the outset. Sounds obvious, but it’s very easy to overlook this line of questioning, especially if purchasing is being done on a decentralised basis.

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Scientist Ng brings AI to manufacturing

Artificial intelligence pioneer Andrew Ng launched a new AI company Landing.ai on Thursday.

On the same day, the company announced a strategic cooperation with electronics contractor Foxconn to develop a program that aims to bring AI and machine learning technologies to the manufacturing industry.

According to Ng’s statement, his company is developing a series of programs to help enterprises transform for the age of AI, including providing new technologies to optimize companies’ organizations structures, train employees, and more. The company’s businesses will start in the manufacturing industry.

Ng said the AI technology is conductive to manufacturing enterprises to improve quality testing process, shorten products’ design cycle, remove bottleneck of supply chain, reduce waste on materials and energy and raise output.

AI will revitalize manufacturing industry and generate jobs in the industry, he said. I In the age of AI, the employees need to accept new skills training to fit jobs that will be more complex than before, Ng added.

Landing.ai will provide solutions to some employees who are likely to be laid off, Ng said. Currently, the company is discussing the training plan with some potential partners including local governments.

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Helping Procurement Professionals Build Resilience in Their Own Supply Chains

The Chartered Institute of Procurement & Supply (CIPS) has launched a free online tool to support procurement and supply management professionals and those with an interest in buying to develop resilience in their own supply chains.

A CIPS survey in 2016 of 900 professionals revealed a growing awareness that unmitigated risk can have disastrous consequences for companies in terms of revenue and impact on margins.

Of those surveyed, 46% ‘sometimes’ have mitigation strategies in place and yet 52% expected the same level of service from their suppliers in the event of a disruption.

The Risk and Resilience Online Assessment Tool helps procurement professionals to identify where specific risk exists in their supply chains in seven key areas:

  1. Geographical. Restrictions on commodities or trade tariffs can have devastating effects on supply chains along with environmental concerns and reputational damage.
  2. Functional. Poorly conceived strategies and poor systems controls can make critical parts of the supply chain high risk.
  3. Performance. Suppliers may be engaging in bad working practices or failing to provide the right product, at the right time, to the right place.
  4. Technical. An inadequate level of internal security surrounding IT systems could lead to cyber risk and loss of customer, or partner data and loss of revenue.
  5. Governmental. Actions from governments could influence the movement of goods, with sanctions and embargoes and could affect reputation if found to be supportive of human rights abuses.
  6. Ethical. Dents in customer confidence will affect revenue streams and reputation, disaffected workforces can produced delayed, poor-quality goods.
  7. Legal. Breach of laws and statutes will cause delays and issues in supply chains. Diligence is required to ensure suppliers and contractors are also compliant.

Read more at Helping Procurement Professionals Build Resilience in Their Own Supply Chains

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Four Steps to Building a Global Chain Risk Management Platform

Be proactive – and significantly reduce global supply chain risks, discover the 4 steps to building a global supply chain risk management platform in a white paper from Avetta.

A global marketplace presents a complex set of challenges, especially when attempting to maintain a safe and sustainable working environment for your employees, contractors, and suppliers.

A minor detail, if left unresolved on the front end, can explode into a financial or operational disaster.

But the implementation of a world-class risk mitigation solution can save time, money, and even lives.

It’s critical to have the plans, resources, and technology in place that verify credentials, measure financial stability, and encourage sustainable business practices.

A proven supply chain risk management partner can ensure that your program is configured efficiently, intuitively, and effectively.

Save your business from negative impacts to its revenue and reputation by taking the right steps to minimize global supply chain risks.

In this white paper from Avetta, you’ll learn the keys to successfully managing your supply chain, protecting it against avoidable situations, and recovering from unforeseen disasters.

Find out how to better equip your business to prevent:

  1. Incidents caused by under-qualified or untrustworthy contractors or suppliers
  2. Injury to employees, contractors, suppliers – and the obligation of medical expenses associated with them
  3. Direct costs such as damaged goods and materials, machinery repair, and insurance deductibles
  4. Indirect costs including revenue loss from brand damage, employee and supplier down time, production delays, and fines

Read more at Four Steps to Building a Global Chain Risk Management Platform

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Supply Chains in Advanced Markets Should Become More Agile, Says Atradius

Atradius, a consultancy specializing in trade credit insurance, surety and debt collections, maintains that the global economy has continued to gain momentum over the past months, with a 3.1% expansion projected for this year.

Higher inflation, falling unemployment, and strengthening Purchasing Manager Indices (PMIs) all suggest higher GDP growth in advanced markets.

Atradius analysts observe that the U.S. economy leads this trend while the recovery in the eurozone becomes increasingly entrenched. The outlook for emerging markets is also brighter, as Brazil and Russia are emerging from recession, and access to finance remains favorable. While the global economic outlook is more robust than in previous years, political uncertainty remains a downside risk to stability.

However, the main challenges to the global outlook – the threat of deflation, negative bond yields, austerity, and low commodity prices – are slowly phasing out.

Global trade is supporting this recovery. After a 1.3% expansion in 2016, trade growth (12-month rolling average, y-o-y) has picked up to 3.3% as of July 2017. The stronger-than-expected expansion is being driven by intra-regional trade flows in Asia and strong import demand from North America.

Despite political uncertainty, most high-frequency indicators point to sustained growth: the global composite PMI posted held steady at 54 in September, pointing to a solid and stable rate of expansion. This has motivated some dramatic upward revisions of trade growth forecasts in 2017. The WTO raised its 2017 forecast for merchandise trade growth to 3.6% from 2.4%.

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Five Techniques to Manage Supply Chain Risk

Risk has always been part of the supply chain. It’s a reality inside and outside the four walls of any organization. It’s no surprise then that as Enterprise Risk Management (ERM) programs proliferate, they have naturally begun to address anticipated and unanticipated events occurring both upstream and downstream in the supply chain.

Upstream of an organization are the suppliers who create goods and services used in a company’s own operations. These include raw components or materials that flow into direct manufacturing as raw materials. There are also indirect products and services that facilitate the company’s actual operations.

The downstream supply chain efficiently distributes a company’s products or services to its customers. All contracted suppliers, both upstream and downstream, must be proactively managed to minimize financial, confidentiality, operational, reputational and legal risks.

You don’t have to look any further than recent headlines to see potential fallout here. Did Equifax have proper data liability insurance coverage in place before 143 million accounts were hacked? And even if they did have coverage, how much was their reputation and customer account credibility damaged? This is still playing out, so not even Equifax management yet knows the impact of the risks taken.

Read more at Five Techniques to Manage Supply Chain Risk

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Microsoft Reinvents its Supply Chain by Leveraging SAP Ariba & Intrigo Systems

Microsoft Corp. has one of the most complex supply chains in the world.

And to keep it humming and ensure supply keeps up with demand for its hottest products, the company is reinventing its supply chain.

In a newly released Webcast (watch the video above), the company discusses how it is teaming with SAP Ariba and Intrigo Systems to create a scalable, modern platform to support the efficient, cost-effective manufacturing of its most popular products, including the Xbox and Surface.

“At Microsoft, our mission is to empower every person and organization on the planet to achieve more. And our strategy to achieve this is to build best-in-class systems and platforms and productivity systems,” said Ali Khaki, Principal PM, Supply Chain Engineering, Microsoft.

“When we looked at our supply chain, it was clear we needed to build a flexible, scalable platform that could support the complexity of our hardware business.”

And it is using SAP Ariba solutions for direct spend to do it.

“The Ariba® Network is the backbone for Xbox and Surface line of products supply chain,” Khaki said.

Through the Ariba Network and the cloud-based applications delivered on it – including SAP Ariba Supply Chain Collaboration™, Microsoft has created a modern platform from which it can safely and easily collaborate with multiple tiers of contract manufacturers and suppliers across key supply chain planning and execution processes, including:

  1. Sharing production forecasts, orders, quality, and inventory information.
  2. Anticipating and resolving supply assurance problems.
  3. Onboarding suppliers.

Read more at Microsoft Reinvents its Supply Chain by Leveraging SAP Ariba & Intrigo Systems

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How intelligent automation will impact and revitalise global supply chains

The idea of automation in manufacturing and the supply chain is nothing new – since the earliest days of the industrial revolution we have sought to automate tasks with machines, and lower the cost of manufacturing processes.

In countless cases, the application of machines, and more recently software, has meant improvements in the consistency of products, facilitated near 24/7/365 production and has meant staff can be focused on higher value tasks in their company.

Yet the use of technology in the industry may not be fully understood; a recent Capgemini survey showed that nearly half (48%) of UK office workers are optimistic about the impact automation technologies can have. However, while respondents to the survey had a general idea of the benefits that might accrue, they were less clear as to how these technologies could be applied to their specific area of work. And worryingly, only 20% said they felt their organisations were currently benefiting from automation – clearly the industry is missing a trick.

However, as utilisation stagnates for certain companies, the market is maturing. Automation is now reaching far beyond simple process software and mechanisation. Technologies such as the Internet of Things (IoT), cognitive computing, advanced robotics, Digital Fabrication and blockchain are becoming increasingly popular, bringing together the power of automation and analytics.

Yet other areas such as artificial intelligence (AI) and machine learning, which are proven enablers for new ways of optimizing the supply chain and manufacturing processes, are less understood. It’s agile, forward-thinking businesses that are able to utilise these technologies in a thoughtful way that will reap the benefits.

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